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This pricing approach sells upgrades

Wednesday, May 1, 2013

About 25 years ago, Mike Jackson [www.goldenstudios.com] shared his three-tiered pricing approach—a powerful sales tool that will boost any shop’s profits. With Mike’s approach, rather than offering one version of the sign based on what you think the customer wants and is willing to spend, you also show two upgraded versions.

Over the years, many sign professionals have said in SignCraft that they use this approach when selling their work. In the May/June 2013 issue, Larry Elliott, Elliott Design, McLemoresville, TN, tells how he used it to sell this monument sign.

Larry also uses it to sell design. In his display area, he has a large framed poster that shows three ways of making the same sign. All three versions use the same size, shape, materials and production. The only difference is the design time involved.

It shows the prospective client how the design adds advertising value. It also makes sales easier by clarifying what the client wants, and their client’s budget, early in the process.

“Some clients realize right away that they don’t have to settle for something generic,” says Larry. “Others, of course, just want the basics. They don’t realize the power of a more

effective sign to attract more business for them. If that’s all they want, we can still provide a basic sign for them.

“But we try to sell up every chance we get. We’re constantly educating people about how they can get the best value. Digital printing is a good example. It doesn’t cost much to add more color to their sign—not like it did when everything was hand lettered or screen printed. It’s really a matter of layout skills and knowing how to use color effectively, along with a little extra time on the computer. It’s more effective for them, and more profitable for us.

“If a shop just takes the customer’s copy and puts letters on a board, the sign shop is the only winner. They got paid for a job that doesn’t provide the client efficient marketing. We all use the same basic materials and equipment to make signs. It’s what you do with those items that makes a sign worthy of bringing business to your customer—or being just a board with letters on it.”

Click here to see how Larry uses this graphic on his website, too. On the site, he’s added text to explain the differences, and the value, of each option. It’s easy to make your own display like this. Take a recent project and create drawings of the two other versions so that you can show it as basic, intermediate and complex.

Mike’s three-tiered pricing can be used no matter what type of work a shop does—cut, printed, 3D, illuminated. It’s always going to result in increased sales. Click to read Mike’s article, Take a three-tier approach to pricing.

There are plenty of reasons why this approach works so well. People like choices, and often will stretch the budget to move up a notch. It also lets you adjust the price by adding or deleting features. Rather than you cutting the price on the same product, they can choose a version that fits their budget.

“We get all the same requests that other shops get,” says Larry. “Often someone is looking for a sign for as little as possible, as big as possible, with a list of everything they have in their store. I don’t think many customers really know what they need when it comes to marketing and advertising. I try to steer them into making a decision for quality in place of quantity, so that they get the best value for their investment.

“The advertising value of signs is the best advertising your marketing budget can buy. A few months back, SignCraft mentioned a chart that I use on my website. [Click to see Show the true value of a sign to a client.] It helps the client understand how their money spent on signs comes out to only a few cents per day over the life of their sign. It’s a great sales tool, and I hope you print it and use it to help increase your sales.

“For those who have never used SignCraft’s Sign Pricing Guide, you’re missing a wealth of information for quick estimates in four price categories, along with forms for helping you establish a profitable hourly shop rate. That exercise is a must-do project every year to stay on top of changing overhead.”

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